from the someone-found-the-loopholes dept

Following last year's pretty good Supreme Court ruling in the Alice v. CLS Bank case, which effectively wiped out the basis of many software and business method patents by saying you couldn't get a patent on "generic" functions, there was a pretty immediate impact on patent trolling. Courts were invalidating patents based on the ruling, the US Patent and Trademark seemed more willing to reject patents based on the Alice ruling, and even trolls seemed to be admitting defeat. Uber troll Intellectual Ventures laid off a bunch of people and OG patent troll Ray Niro indicated he was moving on to more lucrative trolling opportunities, such as in trade secrets.

But, never fear, the Patent Troll Strikes back sequel is fast becoming reality. The good folks over at Unified Patent have a report out on the latest numbers, which suggest the decline in patent troll activities last year was merely a brief disturbance and that patent trolling has bounced back significantly. While 2014 definitely showed a dip, 2015 has showed that patent lawsuits have gone right back up again:

And, it's notable that a growing number appear to be patent trolls (or "non practicing entities" as some prefer to call them). The gold color are troll suits:

And this is all particularly pronounced in the high tech field, where nearly 90% of all lawsuits were filed by trolls:

And thus, despite the Alice ruling there seems to be tremendous evidence that we need patent reform as part of the solution. While another recent analysis shows that courts are still tossing out patent claims as invalid in a post-Alice world, it doesn't seem to be stopping the lawsuits. And that's likely because many trolls are realizing that even if their patents are invalid, it's still much easier for many to just settle and pay up than go through with the whole trial process.

from the sympathy-for-the-USPTO-somewhat-of-an-anomaly-itself dept

The US government is now shut down, thanks to both parties' inability to see a national budget as anything more than a partisan battleground, sniping at each others' pet funding for weeks on end without reaching a compromise. A number of gutless spending cuts were proposed, fought over and rejected, with very little forward progress being made.

In the event of a general government shutdown on October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for approximately four weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we will be able to operate in this capacity during a general government shutdown. We will provide an update as more definitive information becomes available.

Should we exhaust these reserve funds before a general government shutdown comes to an end, USPTO would shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.

Say what you will about the office's track record of granting trademark and patent protection to some very dubious applicants, but the USPTO does some things few other government agencies can claim: 1.) operate on its collected fees and 2.) turn a profit.

As it technically shouldn't require a budget allocation to operate, it seems odd that it should have to shut down at all. Arguments were made by the American Intellectual Property Law Association earlier this year that it shouldn't be part of the sequester, thanks to its ability to fund itself with collected fees.

“[W]e have serious doubts that the USPTO is lawfully subject to sequestration in the first place because it is funded through fee collections, not through government spending.”

“We believe that [the procedures being applied] restricts the spending authority of fee funded agencies and impacts them asymmetrically and unfairly relative to non-fee funded bodies.”

So, the USPTO is still a budget line and as such, is subject to the same treatment as other entities in these appropriations bills. Consequently, it will be shutting down along with the rest of the government if the shutdown outlasts its reserve. The other factor that plays into this strange situation is the fact that the reserve fees it's using to fund the next four weeks aren't safe from the rest of the government, which has shown a propensity for dipping into the USPTO's profits repeatedly over the past 20+ years.

Fee diversion (i.e., confiscating money paid to the USPTO by customers) has a long history that spans at least two decades and three different Presidents, although for a brief time during the Bush Administration it did cease thanks to the efforts of then Director Jon Dudas.

Since 1991, about $1 billion in user fees have been withheld from the USPTO as a result of the practice of diverting user fees – collected from patent and trademark applicants – away from the Office to unrelated government programs. The America Invents Act, signed into law on September 16, 2011, created a “reserve account” in the U.S. Treasury to hold the fees collected by the USPTO that exceed its annual appropriation. The law instructs the USPTO to look to appropriations acts for instructions on how to access the money. The FY 2012 appropriations bill did include instructions for the USPTO on how to access money in the reserve fund, however such language must be reinserted each future appropriations bill. Therefore, the reserve account alone will not stop diversion and a more permanent fix is needed.

To that end, Rep. Mike Honda has submitted a bill to protect the reserve fees from being diverted to cover shortfalls elsewhere or fund new spending. But, much like the budget itself, it's currently languishing in the House, not having moved forward since June 28th.

The entire office (of nearly 12,000 employees) won't be shut down, though. Critical systems will be maintained in order to protect two mostly-imaginary things that the government holds near and dear: intellectual property rights and national security.

The excepted employees will ensure the functionality of processes and systems minimally necessary for the preservation of patent rights, to allow compliance with statutory provisions that cannot be waived, and avoid disclosures of information that would be detrimental to the national security.

Additionally, the excepted employees will ensure the functionality of processes and systems minimally necessary to preserve trademark rights. Preventing the public from accessing the USPTO’s electronic filing and payments systems may result in the complete or partial loss of intellectual property. Therefore, in order to prevent the loss of valuable intellectual property, these systems should remain open during any closure of the USPTO.

While I have (along with others) expressed some deep disappointment and incredulity at the agency's actions, the fact remains that it's a governmental anomaly. It turns a profit. And its reward for making money is being made to suffer through sequestration and shutdowns and have its surplus (which could keep it operating through both events) drained by opportunistic legislators who assume a penny saved is a penny better spent.